Lump-Sum Liquidation

Three university students, Cho, Kenney, and Martinez, operated a successful business, renting furniture and appliances to students residing in dormitories and off-campus apartments. The three are now graduating and wish to sell the business before beginning their respective careers. They shared profits in a 1:2:1 ratio. The partnerships current balance sheet is as follows:

Cash	$10,000		Accounts payable	$50,000
Loan receivableCho	25,000		Loan payableKenney	10,000
Other assets	140,000		CapitalCho	50,000
			CapitalKenney	35,000
			CapitalMartinez	30,000
Total assets	$175,000		Total liabilities and capital	$175,000

Another student group, organized as an LLC, wants to buy the business. The LLC's offer of $100,000 for the partnership's other assets is accepted and received by the partnership. Liabilities are then paid and the partnership is liquidated.

Required

How much does each partner receive? Assume that if one of the partners forms a capital deficit, they are insolvent and unable to pay the difference.

Cash Distribution
Cho	Answer
Kenney	Answer
Martinez	Answer